Chair's 3 Minutes: Council wants to know how real property tax affects you

April 21, 2013

The real property tax is the most significant revenue source for many counties, and that's long been the case for Maui County. It's fitting that during this month of celebrating county government, the County Council is deliberating the mayor's proposed budget, including his proposal to raise real property tax rates.

County government has deep roots in our society. When the 13 colonies were established, counties were among the first governmental units.

County government is the closest form of government to Hawaii's people and often has the greatest ability to address residents' needs and preferences. The role of counties, as governments created by states, is to provide essential public services.

In Hawaii, real property tax revenue is the predominant source of funding for these services.

The real property tax is based on property valuations, with tax rates assigned to 10 classifications: Residential, Apartment, Commercial, Industrial, Agricultural, Conservation, Hotel/Resort, Time Share, Homeowner and Commercialized Residential. For the fiscal year starting July 1, the mayor is proposing an increase in each classification except Homeowner.

According to the proposed budget, real property tax revenues are anticipated to represent 42 percent of Maui County's revenue sources. This is a 3-percent increase from the current fiscal year.

There are a number of real property tax exemptions. These are variously intended to lighten the burden for working families and vulnerable community members, encourage open space, facilitate development of alternate energy improvements and support affordable housing.

The most well-known exemption is the home exemption.

Under this exemption, a principal home that is valued at $200,000 or lower is only required to pay the $250 minimum tax. A principal home that is valued in excess of $200,000 is exempted by $200,000.

While real property tax revenues are critical, the process of implementing the tax is far from perfect. I've heard heart-wrenching stories from kamaaina families about how application of the tax has forced them to sell properties that have been in their families for generations.

Though Maui County's real property tax rates are among the nation's lowest, we still need to work on ensuring the system is equitable and protects our residents.

The council will hold a public hearing on the proposed budget in the Council Chambers at 6 p.m. Wednesday. At 6 p.m. May 2 in the Chambers, the council will hold another hearing specifically on the proposed real property tax rates.

I encourage the public to testify at both hearings.

As we consider the mayor's proposal to raise tax rates, we must be mindful of how the tax affects people. The real property tax must be fair and respectful to those who have helped to build this county and to those who rely on county services throughout the year.